EghtesadOnline: A new round of volatility returned to Tehran's chaotic foreign exchange market Tuesday amid rising uncertainty and prospects of further political tensions.
Quoted below 260,000 rials in the early hours of trade, the dollar jumped to 263,000 rials later to close 4% higher compared to the earlier session.
The greenback gained signals from parliament that was seen by currency dealers and speculators as escalating political tensions and the likelihood that the national currency could take fresh hits.
The Majlis on Tuesday approved outlines of a draft bill that obliges the Rouhani administration to suspend all commitments stipulated in the Iran nuclear deal with six world powers in 2015 officially known as the Joint Comprehensive Plan of Action, IRNA reported.
The landmark agreement was abandoned by the United States in 2018 under the acrimonious president, Donald Trump, who that year imposed an economic siege against Iran. Fearing US wrath, other western signatories of the deal failed to fulfill their commitments leaving the JCPOA in limbo.
The rial gained against major currencies in the past three weeks soon after Trump was defeated by the Democratic candidate Joe Biden in the highly contested US presidential elections.
The national currency picked up following cautious optimism that with the change of guard in the openly antagonistic Trump White House the economic situation would improve and strengthen the devalued rial. However, economic experts say the parliament’s latest nuclear decision is unhelpful and could undermine prospects of deescalating Iran-US tensions after Biden is inaugurated on January 20. Iran and the US do not diplomatic relations for the past four plus decades.
Other currencies also rose on Tuesday. The euro was traded at 314,000 rials, 4.5% or 14,000 rials higher than the previous session. The UK pound sterling jumped to 349,000 rials up 14,000 rials in one day and the UAE dirham fetched 71,600 rials.
In the follow-up to upsurge at the forex market, rates also went up in the authorized exchange bureaus.
Melli Exchange, affiliated to the Bank Melli Iran, quoted the dollar at 256,180 rials or 2.46% higher compared to Monday.
Driven by trends in the currency market plus the upsurge in prices of the precious metal in international markets, sentiment in the domestic gold market was high.
The Emami gold gained more than 5% and was quoted at 120 million rials on Tuesday rising by a solid six million rials compared to the earlier session.
Half Bahar Azadi gold coin gained 2.5% to reach 61 million rials and one gram of 18-karat gold was worth 11.14 million rials, up 5.5%.
Increase in global gold prices further impacted the domestic gold market. Gold rose 1% on Tuesday, rebounding from a five-month trough in the previous session, on a weaker dollar and as rising coronavirus cases overshadowed some of the optimism for a quicker vaccine-fuelled economic recovery.
Spot gold rose 1.1% to $1,796.61 per ounce for the day. The US gold futures gained 1% to $1,800.20, Reuters reported. The metal clocked its worst monthly fall in four years on Monday, slipping to $1,764.29, the lowest since July 2, as investors flocked to riskier assets such as equities.